In
re
Olmstead
Township, Ohio
and
Fraternal
Order of Police
117
LA (BNA) 540
FMCS
Case No. 00120/00854-6
April
19, 2002
Gregory James Van Pelt,
Arbitrator
I. Was
the matter timely filed, and properly before the arbitrator?
II. Whether the prescription drug
insurance coverage were equivalent to predecessor plans, as provided in
Sections 18 and 18.02 of the collective bargaining agreement.
The Grievance, dated May 27, 1997
reads, in pertinent part:
Statement of Grievance:
On or about May 1, 1997, the employer changed the employee's
Hospitalization and Insurance plans. The new plans, not equivalent to the
current plan as stated in Article 18 & 18.02. The new plan having increased
costs to the employee, particularly to prescriptions.
Remedy requested:
A plan equal to the current one
(Previous Contract) and reimbursement to the employee for costs of
prescriptions over and above the amount under the previous coverage.
Relevant Contract Provisions (In
Pertinent Part)
8.01 A grievance is a complaint,
dispute or other controversy in which it is claimed that either party has
failed in an obligation under this Agreement and which involved the meaning,
interpretation or application of this Agreement. This grievance and arbitration
provision is the sole process for addressing alleged violations of this
Agreement.
8.02 Both parties agree that all
grievances should be dealt with promptly and every effort should be made to
settle grievances as close to the source as possible.
8.03 Should the Administration
fail to comply with the time limits herein, the Labor Council may appeal
immediately to the next step. Should the Labor Council fail to comply with the
time limits herein, the grievance shall be considered abandoned. All time
limits may be extended by mutual consent.
8.04 The following procedures
shall be utilized when a grievance is initiated by any members of the
bargaining unit.
Step 1
A grievance must be presented orally
or in writing, at the choice of the aggrieved, to the Chief of Police or his
designee, within five (5) working days of the occurrence or within five (5)
days after it has become known to the employee. The Chief or his designee shall
have five (5) days following such presentation to submit an oral response. The
employee shall be accompanied by a Labor Council representative, if so
requested.
18.02 The Township shall obtain
and maintain in full force and effect, and pay one hundred percent (100%) of
the cost thereof, a policy of hospitalization and medical cost insurance for
each employee and his family, this policy shall also include dental, vision and
a prescription program. The Township shall maintain the current insurance plan
or its equivalent.
Effective January 1, 1998
employees will pay one-half of any increases in premiums above the rates that
will go into effect in April 1997, or the rates set forth below, whichever
rates are less. The maximum that an employee will be required to contribute is
$25.00 per month for single coverage and $50.00 per month for family
coverage.
In late 1996 or early 1997,
Metropolitan Life Insurance Company (Met Life), at that time the carrier for
the health and medical coverage offered by the Township under Section 18.02 of
the Agreement, merged with United Health Care (United). As a result of that
merger the Employer was informed that its current health care policy would be
available only for some six months, after which further coverage would be
unavailable through Met Life.
As a consequence of the
curtailment of its existing policy, on May 1st of 1997 the Township implemented
a new health care plan, under United Health Care. Among other measures, in
March and April of 1997—prior to implementation of the new coverage—the
Employer held a number of informational meetings for concerned employees,
including members of the FOP. At these meetings, in discussions with union
representatives and in personal letters, Olmsted Township administrators
promulgated information regarding the new coverage.
While the United plan afforded primary benefits substantially
comparable to those provided under Met Life, a number of its provisions
differed from the predecessor coverage. Among these, and at issue here, was an
increase in prescription drug coverage from a flat $3.00 per prescription to
$15.00 per prescription for generic drugs and $30.00 for brand name
pharmaceuticals.
The Grievant in the present
matter, a Dispatcher with the Township since 1977, required medication for a
number of conditions, and consequently utilized the prescription drug coverage
extensively. When the Met Life plan was supplanted by United coverage in May of
1997, the Grievant obtained prescription coverage under a plan provided by her
spouse's employer. She continued under her husband's medical coverage, at $4.00
per prescription, until his retirement in February of 1998.
At approximately the same
period—mid- 1997—negotiations regarding the successor Agreement for the period
obtaining at the time of these proceedings
For a number of years following
the grievance filing the Parties engaged in discussions intended to resolve the
dispute. A tentative agreement arrived at by the FOP and the Township was not
acceptable to the Grievant, and was accordingly rejected. The matter was
accordingly presented for arbitration in the instant proceedings.
Olmsted Township challenges
presentation of this matter to the Arbitrator, on the grounds that it was not
timely filed. In support of its assertion of lack of procedural arbitrability,
the Employer points to language of Step 1 of the Grievance and Arbitration
Procedure delineated in Article 8 of the Agreement. Under that provision a
grievance must be filed within five (5) working days of the occurrence of the
precipitating event, or within five (5) working days after it has become known
to the aggrieved.
The Grievant had or should have
had notice of the new plan, including the changes in prescription drug
coverage, prior to implementation of the new plan on May 1, 1997. The Township
maintains that it made every effort to inform affected employees of provisions
of the new United coverage, including holding meetings with bargaining unit
representatives. Among additional efforts were letters to individual employees,
open meetings in the workplace and other measures to assure information
regarding changes in health care benefits, including those in the prescription
drug coverage, were provided prior to implementation of the new plan.
Nevertheless, says the Employer, the Grievant neither attended meetings nor
took advantage of other opportunities to familiarize herself with the new
plan.
Notwithstanding attempts to
inform employees of the new health care coverage, the Township maintains that
the plan was actually implemented on May 1st of 1997, while the present
grievance was not filed until May 27th of that month, well beyond the
contractual five day period for timely filing. Accordingly, the Township urges
the Arbitrator to determine the matter to lack arbitrability under the
Agreement, and to dismiss the matter.
The Union argues that the
Grievant did not obtain a prescription under the new drug program until May
25th, only two days prior to grieving. As she was not affected by the new
policy prior to that date, she had no knowledge of the impact, and therefore
could not be expected to grieve the charged contractual violation.
Alternatively, the FOP maintains that the violation alleged in the present
grievance is recurring; each time the Grievant pays more for prescriptions
under the present medical coverage is another violation of the contractual
requirement for equivalent health care benefits, says the Union. Therefore, it
requests that the Arbitrator find the grievance to have been timely filed.
The Township clearly made great
effort to inform its employees, including FOP members and the Grievant here, of
the specific prescription drug and other changes in coverage under the United
health and medical plan. However, health insurance coverage is a complex and
often arcane matter, with implications in specific cases not readily
comprehended, even by those with some understanding of the terms and conditions
involved. For most lay persons, including the Grievant, constructive knowledge
of the personal and individual ramifications of changes in insurance coverage
can be fully appreciated only through experience. Moreover, it is arguable
that, relying on the contractual equivalency, she believed the prescription
drug benefit would be the same under the United plan as it had been under Met
Life. Consequently, it is reasonable to conclude that the Grievant lacked
knowledge of the effect of the United plan's prescription coverage change until
she was required to pay the resulting bill. The occurrence on which the present
grievance is based became known to the Grievant on March 25, 1997. Her
grievance, dated March 27th, was accordingly timely filed under the provisions
of Section 8.04 of the Agreement. The matter is therefore properly before the
undersigned Arbitrator for final and binding resolution on the merits.
The FOP bases the present
grievance on Section 18.02 of the 1996-98 Agreement, providing that, “[t]he
Township shall maintain the current insurance plan or its equivalent”. When the
Employer changed carriers from Met Life to United, says the Union, the plan it
selected did not provide equivalent prescription coverage. As a result, the
Grievant was forced to incur increased and unwarranted cost for health care in
violation of the Township's contractual obligation. Accordingly, the FOP urges
the Arbitrator to sustain the grievance and to direct that the Grievant be
reimbursed for all prescription drug costs in excess of $3.00 per prescription
incurred from May of 1997.
Prescription drug coverage critical
to the Grievant under the United plan was not equal to that existing when the
1996-1998 Agreement was ratified, at which time the Met Life plan was “the
current insurance plan” according to the FOP. The Grievant concedes that
provisions of the United plan were largely “comparable”to those of its
predecessor, and that some benefits, including vision, dental care and other
ancillary coverage may have exceeded those provided by Met Life. However, says
the Union, those benefits were not useful to the Grievant, and were not
sufficient to balance the loss in prescription drug benefits.
Section 18.02 was intended to
protect Township employees from inferior health plans during the course of the
Agreement, the FOP asserts. In agreeing to its language, the Employer was
obligated to provide substantially equal benefits, including prescription drug
coverage, even if meeting that obligation resulted in increased expense to the
Township. In fact, the Union argues, the Employer could have obtained equal
drug coverage at a 5.4% premium increase. Alternatively, the Employer had the
option of obtaining coverage from other carriers. Failing to do either, the FOP
asserts that the Township violated its contractual obligation to maintain
current coverage.
As a result of the Employer's alleged violation, the Union argues that
the Grievant suffered additional prescription drug costs. She mitigated those
costs through use of her spouse's $4.00 per prescription drug coverage until
his retirement in February of 1998. Subsequent to that time, she contends she
was required to pay $15.00 and $30.00. The total amount of her additional
prescription drug costs rose to some $1,989.99 incurred between May of 1997 and
the hearing date. Accordingly, she seeks to be made whole for all such
co-payments incurred in excess of the $3.00 amount provided under the Met Life
plan obtaining at the time of 1996-1998 contract ratification.
The Township maintains that it had no choice but to change carriers for
the medical insurance afforded its Employees. Met Life no longer provided such
coverage after its merger with United Health care. Pointing to the language of
Section 18.02, the Employer asserts that it had a contractual right to change
carriers, provided such change resulted in coverage “equivalent” to current
benefits. Therefore, it asks that the Arbitrator deny this grievance.
The language of Section 18.02
provides the Township with flexibility in its health and medical insurance
providers. So long as the coverage was equivalent to that furnished under Met
Life, the Township argues, it had a contractual right to make the change.
Equivalent, it says, does not mean identical, a distinction it maintains was
acknowledged by Union representatives.
In fact, according to the Employer, the United Health Care policy was
superior to the previous coverage in a number of respects. Most significant
among these was that Met Life provided HMO coverage, with no access to
physicians outside its limited, local network. United also was an HMO program,
but allowed open access to a much larger physician and hospital network, with
access to care on a 24 hour basis. In addition, the United policy provided
vision and other benefits not included in the coverage under Met Life.
Testimony on behalf of the
Employer indicated that, while it did have an option to continue coverage under
Met Life for six additional months, to do so would have resulted in an 8.1%
premium increase. At the end of the six-month extension the Township would have
been forced to obtain coverage under another carrier. Prescription drug plans
industry-wide are raising co-payments, according to the Employer, and coverage
identical to that provided under the Met Life plan was simply not available
under United. While it concedes that it might have shopped for coverage from
another carrier, the Township contends it had a responsibility to its citizens
to be aware of health care costs, and accordingly chose to contract with United
Health Care.
Although not identical to the
previous policy, the Township argues that the United coverage provides greater
benefits to more employees than did its predecessor. Accordingly, it maintains
that the plan is equivalent, if not superior to that currently in effect at ratification
of the 1996-1998 Agreement. Therefore, it asks the Arbitrator to determine the
change in carriers to have been within the contractual right of the Employer,
and to deny the present grievance.
Understanding that health and
medical insurance coverage was and continues to be unstable, the Parties here
included in their 1996-1998 Agreement a provision that would allow the Township
to change carriers and insurance plans at its discretion. However, to maintain
the level of coverage the replacement plan was required to be “equivalent” to
that in effect at ratification of the Agreement. The successor Agreement, which
became effective on January 1, 1999, contained that provision verbatim.
The crux of the issue presented
in this matter is the meaning of “equivalent” as intended by the Parties in
drafting Section 18.02. The Township argues that “equivalent” does not mean
“identical”. In fact, it maintains that the benefits available to its employees
under the United plan were in some ways superior to the previous Met Life
coverage. While the Grievant here did not receive the same prescription drug
coverage afforded her under the previous policy, says the Employer, the
Grievant and all Township employees enjoyed increased access to physicians,
hospitals and other medical services under the new plan. Therefore, the
Employer asserts the provided coverage was at least “equivalent” under the
terms of Section 1802. The FOP does not disagree that equivalent coverage does
not necessarily mean an identical plan, but merely argues that the Grievant
here suffered increased prescription drug costs under the new plan.
There is no ambiguity in the
pertinent language of Section 18.02: “The Township shall maintain the current
insurance plan or its equivalent.” The plain meaning of the term “equivalent”
is not difficult to divine; Webster's Unabridged gives us, “[t]hat which is
equal in value, quantity, etc . . . to something else.” To extend Section 18.02
then: “The Township shall maintain the current insurance plan or `that which is
equal in value'”.
The Township contends that the
equivalence of the two plans lay in a holistic assessment of their coverage, as
applied to and utilized by a majority of its employees. Under the
interpretation urged by the Employer, the United Health Care plan would seem at
least the equivalent, if not superior, coverage.
However, we are not presented
with a global or class grievance here. The Grievant in this matter irrefutably paid more for
prescription drugs essential to her health under the new carrier. It was also
unrebutted that advantages ostensibly available under the United plan, such as
the vision care or more extensive network, were of insufficient benefit to
offset the increased cost of her medication. As applied to the Grievant,
then, the two plans were not, “equal in value” as required under Section 18.02.
She is accordingly entitled to compensation for this loss, beginning with its
first occurrence on May 25, 1997, two days prior to the filing of the present
grievance.
If the plain meaning of the
Agreement supports the grievance as to losses during the 1996-1998 contract
period, however, it also militates against the Grievant's claim to increased
prescription costs occurring after the effective date of the successor
Agreement in January of 1999. At that time the “current insurance plan” was
that provided by United Health Care, not its predecessor under the previous
contract. Therefore, the Grievant was not entitled to $3.00 prescription co-payments
after that date.
Therefore, it must be determined
that the change in carriers implemented by the Township violated the Grievant's
contractual rights under Section 18.02 and her grievance is accordingly
sustained. The Employer is directed to compensate the Grievant for all
documented prescription drug costs in excess of those co-payments provided
under the Met Life prescription drug plan incurred during the period from May
25, 1997 until January 1, 1999.
The grievance is sustained. The Employer is directed to
compensate the Grievant for all documented prescription drug costs in excess of
those co-payments provided for under the Met Life prescription drug plan she
incurred during the period from May 25, 1997 until January 1, 1999.